Vice President Joe Biden says the oil industry no longer needs the $5 billion in annual tax credits that the government has doled out for years. Instead, he recommended applying half of those credits to clean energy industries like wind and solar.
Biden's comments at a solar industry conference in Anaheim, Calif. on Wednesday were no doubt music to the ears of the solar executives in the audience. The solar industry has been desperately trying to extend an important clean energy subsidy that would otherwise start being phased out in 2016.
Solar project developers get a 30% federal tax credit, thanks to the federal investment tax credit, or the ITC. But the credit is set to start ramping down to a 10% credit after 2016. Lowering the credit could have a huge impact on the financial health of the U.S. solar industry.
During his speech, Biden said that the oil industry's tax credits no longer make sense because companies do not take on as much financial risk as they used to. Before advanced technology, they had to drill many expensive test wells before they could produce oil, Biden said.
But today these oil industry tax credits are wasteful and unnecessary, and should be eliminated, he said. Shifting the oil industry's tax credits to clean energy would reduce overall carbon emissions and would help grow the economy by expanding the clean energy industry.
Beyond eliminating oil tax credits, Biden generally supports extending solar tax credits. "Solar energy could quadruple by 2022 if we extend these tax credits," said Biden.
Biden pointed to the large number of jobs that both the solar and wind industries have created in recent years. Quoting an often cited statistic, he said there are more people employed by the U.S. solar industry than by Twitter (twtr), Apple (aapl), Facebook (fb) and Google (goog) combined.
Biden noted that the amount of solar power generated in the U.S. since the Obama administration took office has "increased 20-fold." He said the administration couldn't take all of the credit, but that it was responsible for some of the growth.
He referred to the work that the Obama administration did through the stimulus spending in their first term, and through spending on new clean energy technology programs. Overall the administration has invested $90 billion in cleantech through various programs and over the years.
Biden used the speech to highlight another $120 million in government grants for various solar energy research and development projects. Those investments are meant to continue to reduce the cost of solar over the next five years.
Biden also said that the shift in the transition between fossil fuels and clean energy would create winners and losers. However, the U.S. has a moral imperative to help out workers who lose their way of life, like coal miners, he said.
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